- (1.)FOR two asst. yrs. 1975 -76 and 1976 -77 a composite statement of case has been submitted and following questions of law have been referred by Tribunal, Ahmedabad Bench "C" arising out of its decision in IT Appeal Nos. 2240 and 2241/Ahd/1981 as required by the CIT, Ahmedabad:
"1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in coming to the conclusion that the order dt. 8th Feb., 1979, passed by the CIT under S. 263 of the Act was liable to be set aside?

2. Whether, the Tribunal was right in law and in facts and circumstances of the case in coming to the conclusion that since they had found the order under S. 263 itself was bad, there was no question of upholding the consequential orders of the ITO to give effect to the order of the CIT under S. 263."

(2.)THE facts relevant for the present purposes and out of which reference has been made may be noticed.
For the two assessment years in question, ITO has completed original assessments on 4th Dec., 1977. Those assessments were set aside by CIT in exercise of his powers under S. 263 by holding the same to be prejudicial to the interest of Revenue by his order dt. 8th Feb., 1979, and the ITO was directed to make fresh assessments. The order under S. 263 was ultimately set aside by the Tribunal. Against the order of Tribunal setting aside the order under S. 263 passed by CIT, the order of Tribunal was made subject -matter of reference before this Court, and the ITO made fresh assessments in accordance with directions contained in the order of CIT which had been set aside. On appeal against the assessment orders, CIT(A) set aside the fresh assessment orders on the ground that order of the CIT under S. 263 having been cancelled the consequential orders could not have been passed in pursuance of those directions. On appeal Revenue failed before the Tribunal also. The only ground raised before the Tribunal was that since reference application is pending before the High Court, the order passed by the ITO ought not to be set aside, until decision of those reference applications.

(3.)THE order of the Tribunal setting aside the order under S. 263 was subject -matter of IT Ref. No. 113 of 1982. The same has been decided by this Court on 8th Oct., 1993 answering the questions in favour of assessee and against the Revenue.
There cannot be any doubt about the proposition that once original assessments have come into force unless the same are set aside in accordance with law in appropriate proceedings, they hold the field and there cannot be two operative assessments at the same time. The effect of order under S. 263 made by the CIT was that the original assessment stood set aside. However, once an order under S. 263 was set aside it resulted in restoration of original assessments on record, there cannot be any room for fresh assessment orders even if the same have come into existence in pursuance of direction issued under S. 263. It cannot be said that by complying with the direction under S. 263, the remedy of appeal or getting determination of the question by way of further proceedings in accordance with the provisions of IT Act become redundant. The consequence of setting aside of an order under S. 263 must follow, namely, the order passed in consequence thereof, must also fail. As has been noticed above, the order passed by the CIT under S. 263 was set aside by the Tribunal and on further reference, the High Court has found the order of the Tribunal to be justified in that regard.